Q JAN ERIK KJERPESETH MANAGING DIRECTOR SPAREBANKEN VEST

Transcription

1 Q JAN ERIK KJERPESETH MANAGING DIRECTOR SPAREBANKEN VEST

2 THREE-TIER DIGITAL STRATEGY In-house development: Opportunities for a differentiated customer experience What we perceive to be our core services Purchase of off-the-shelf solutions: Product/service as hygiene factor only Strategic partnerships: Vipps Fintech

3 RANKING OF NORWEGIAN MOBILE BANKING SOLUTIONS Sparebanken Vest 4,45 Danske Bank 3,9 Sparebank 1 3,65 SPBK Sogn og Fjordane 3,55 Handelsbanken 3,45 Skandiabanken 3,35 Nordea 3,1 DNB 3,05 Average of customers rating in itunes (iphone) and Google Play (Android)* Figures from 5 April *A total of 15,275 respondents.

4 KEY DEVELOPMENTS IN THE FIRST QUARTER Ambitious measures to prepare for the digital shift, Vipps AIRB approved for the corporate market MEASURES Improved profit performance for Q1: NOK 432 million (NOK 322 mill.) Higher return on equity: 10.6% (8.8%) Net interest 1.47% (1.51%), up from 1.43% in the fourth quarter Higher contribution from associated companies: NOK 28 million (NOK 8 mill.) Lower cost development: NOK 355 million (NOK 370 mill.) Core Tier 1 capital: 14.8% Low losses: NOK 29 million (NOK 26 mill.)

5 Financial strength and capital efficiency Moderate risk and low losses A performance oriented bank with ambitious digital strategy

6 IMPROVED CAPITAL ADEQUACY WITH 1.1 PERCENTAGE POINTS WHEN BASEL 1 FLOOR NO LONGER APPLY - AIRB APPROVED FOR THE CORPORATE MARKET Approved Sparebanken Vest is recognised as an advanced bank with very good internal credit models and risk management processes Implication That the bank can calculate the regulatory capital requirement using internal models for both the corporate and retail markets Effect An improvement in Core Tier 1 capital of 1.1 percentage points under AIRB at the end of the first quarter 6

7 CONSIDERABLE EFFECT OF AIRB APPROVAL - FINANCIAL STRENGTH CORE TIER 1 CAPITAL 14.8% Basel 1 floor IRB- AIRB 7

8 LOW LENDING RISK AND HIGH EQUITY RATIO - ABOVE REGULATORY REQUIREMENTS EVEN WITH HIGH RETAIL SHARE Core Tier 1 capital Leverage ratio 13,8 14,1 14,8 14,9 14,8 6,1 6,1 6,6 7,3 7,1 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 8

9 GOOD GROWTH IN THE CORPORATE AND RETAIL MARKETS Retail market Lending 106,2 billion Corporate market Lending 33,4 billion 7.9 % 7.9 % 3.7 % 1.2 % Q1 Growth lending Av.Growth last three years Q1 Growth lending Av.Growth last three years 9

10 IMPROVED NET INTEREST FROM FOURTH QUARTER - REPRICING WITH EFFECT FROM JANUARY Development in nominal net interest Net interest as % of assets under management ,51% 1,49% 1,44% 1,43% 1,47% Q Q Q Q Q Q Q Q Q Q

11 IMPROVED MARGINS IN TOTAL Lending Deposits 3,04 3,03 2,95 2,95 3,09 1,90 1,93 1,70 1,62 1,78 0,21 0,18 0,30 0,36 0,22 0,15 0,11 0,24 0,31 0,21 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Retail Corporate Q1-16 Q2-16 Q3-16 Q4-16 Q1 17 Retail Corporate Measured against 3 month average Nibor. 11

12 Financial strength and capital efficiency Moderate risk and low losses A performance oriented bank with ambitious digital strategy

13 ,6 68,8 68,9 67,7 67,5 67,9 66,1 66,6 63,8 64,3 64,5 65,4 65,9 63,2 63,3 63,0 64,7 64,8 64,9 65,0 62,0 62,3 65,7 62,8 63,2 60,6 62,8 61,7 62,2 59,8 61,6 59,1 60,7 57,9 59,8 59,4 58,7 57,8 57,3 57,9 56,4 60, Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q1

14 STRONG POSITION IN THE RETAIL MARKET - WELL-DIVERSIFIED POSITION IN THE CORPORATE MARKET Loan portfolio NOK bill. Breakdown by sector in the corporate market, NOK 33.4 bill. 2 % 0 % 0 % 5 % 5 % 4 % REAL ESTATE BUILDING AND CONSTRUCTION 8 % 38 % AGRICULTURE AND FORESTRY SERVICE WHOLESALE AND RETAIL TRADE SHIPPING 11 % ENERGY INDUSTRY HOTELS AND RESTAURANTS OTHER FINANCIALS 11 % PUBLIC SERVICES 16 % 14

15 LOW RISK IN THE RETAIL PORTFOLIO - LOW EXPOSURE TO CONSUMER LOANS, 96 % MORTGAGE LOANS LOANS BROKEN DOWN BY LTV RATIO BROKEN DOWN BY REGION 94,7% 74% (75) 4,1% 1,2 % (15) 14% 7% (7) (5) 4% 1% LTV <= 70 % % LTV > 85 % Hordaland Rogaland Sogn og Fjordane Resten of av Norway Norge Abroad Utland 15

16 LOW CONCENTRATION RISK IN CORPORATE MARKET Breakdown by volume* Breakdown by sector in the corporate market, NOK 33.4 bill. 2 % 0 % 0 % % 5 % 4 % REAL ESTATE BUILDING AND CONSTRUCTION 8 % 38 % AGRICULTURE AND FORESTRY SERVICE WHOLESALE AND RETAIL TRADE % SHIPPING ENERGY INDUSTRY HOTELS AND RESTAURANTS 0-50 mill mill over 150 mill Q1 16 Q % 16 % OTHER FINANCIALS PUBLIC SERVICES * Measured by commitments excl. Jonsvoll company. Sectoral distribution is gross lending. 16

17 LIMITED LENDING TO THE OFFSHORE SEGMENT - INCLUDING SEISMIC SECTOR AND CONSTRUCTION Loans to the corporate market NOK 33.4 bill. Comments Total exposure below NOK bill. constitutes approx. 1% of the total portfolio Offshore mainly comprises construction ships Reduced exposure to the offshore sector by NOK 150 mill. last year due to repayment and exchange rate effects The biggest commitments have good contract coverage Many of the big commitments have already been restructured with long-term capital Sjøfart Offshore; Overview offshore portfolio Shipping; Segment Loans NOK million Number of vessels Eiendomsdrift Seafaring Construction Seismic sector PSV ERRV Barges 79 1 TOTAL 1,

18 STABLE LEVEL OF DEFAULTS AND POTENTIAL BAD DEBT* *) Includes all defaults, not just defaults of payment. Includes commitments with individual write-downs, calculated as a percentage of the total lending volume. 18

19 ROBUST AND STABLE LEVEL OF PROVISIONS 19

20 LOW INDIVIDUAL LOSSES - LOWERING LOSS EXPECTATIONS TO MNOK FOR 2017 Quarterly development Breakdown Q Q Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Ind. Write downs Group Provisions Ind. Write downs Group provisions 20

21 Financial strength and capital efficiency Moderate risk and low losses A performance oriented bank with ambitious digital strategy

22 Risk Management Frank Johannesen Managing Director Jan Erik Kjerpeseth CSR Hallgeir Isdahl CHANGES IN TOP MANAGEMENT TO MEET VIPPS LAUNCH Operational Services Siren Sundland Innovation and Customer Experience Bjørg Marit Eknes Retail Market Frank Bjørndal Corporate Market Ragnhild J Fresvik

23 GOOD TO GREAT FROM IN SPAREBANKEN VEST

24 A MORE PERFORMANCE-ORIENTED ORGANIZATIONAL CULTURE Gathering January Performance Management and Strategic Discipline Gathering January Performance Management and Strategic Discipline Gathering /8-9 February Performance Management and Strategic Discipline Section 11 May 4th Culture and the flywheel effect in light of MWB KL+ LU2+LU3 Gathering August 1. Sept. Performance Management and Strategic Discipline Gathering September Performance Management and Strategic Discipline Gathering /25-26 October Performance Management and Strategic Discipline Gathering November Culture and the flywheel effect in light of MWB Full day gathering KL+ LU2+LU3 ALG* ALG* LÅVELEIK * ALG Action Learning Group

25 Welcome to Fagfrokost at Jonsvoll The theme for the next fagfrokost (breakfast gathering) is management, and initially this time is Jim Collin's first book "Built to Last". Preparation for the gathering Read an extract of "Built to Last" that follows this in its own pdf. Repeat Jim Collins's concepts in the three books by looking at the short video nuts that explain the concepts in 1 minute. Reflection on how far we have come on our journey from Good to Great. Use Jim Collin's tools and score the bank in the areas you perceive as relevant. The dialogue for the breakfast gathering will be structured around the tool in point 3.

26 TARGETED EFFORTS LOWER COSTS - DEVELOPMENT EXCEEDS TARGET Cost development over the past year Development in full-time equivalents MNOK 355 MNOK Q1 16 Q1 17 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q

27 The banks that will succeed in the future are the ones that invest in hands-on, inhouse development, focusing on the digital user experience.

28 IN HOUSE DEVELOPMENT GIVES CONSIDERABLE RESULTS New fund saving agreements, monthly Share of e-signable cases in corporate market that are e-signed kr % 88% kr kr kr % 60% kr kr % kr kr - Jan Feb Mar Apr Mai Jun Jul Aug Sep Okt Nov Des 20% 0% nov. 15 des. 15 jan. 16 feb. 16 mar. 16 apr. 16 mai. 16 jun. 16 jul. 16 aug. 16 sep. 16 okt. 16 nov. 16 des. 16 jan. 17 feb. 17 mar. 17 General insurance, monthly Comment kr kr kr kr kr kr - Jan Feb Mar Apr Mai Jun Jul Aug Sep Okt Nov Des Digital sales of fund savings agreements have doubled over the past year Threefold increase in digital general insurance sales 88% e-signed cases in the corporate market 28

29 LEAN AND ROBOT TEAM OF 9 PEOPLE - NEW PROCESS IS AUTOMATED EVERY 14 DAYS Our robots give us 38 Reduced response time Lower costs Processes automated Equals 9 FTEs Increased quality Higher digital sales cases solved Per 27.mars 2017.

30 30 SUCCESSFUL LAUNCH OF NEW DIRECT BANKING IN THE CORPORATE MARKET Reorganized corporate market New direct bank for smaller corporate customers Short distance between direct banking company and IT development The result is good IT tools for employees and customers High KTI (91) on total service offerings in the direct bank High KTI (85) on response time credit

31 FIKEN + SPARBANKEN VEST = TRUE Established partnership with Norway's premier online accounting program Integrated with online banking business Enhanced digital user experiences Value-creating and easy for the customers

32 VERY STRONG PROFIT PERFORMANCE BY FRENDE FORSIKRING The companies pre-tax profit/loss NOK mill. Profit contribution, associated companies 21,6 1,1 2,5 4,9 6,2 MNOK Q Q Frende Forsikring Norne Securities Brage Finans Other companies Share of profit/loss from associated companies ,7 Norne Brage Frende Frende valued at 466 MNOK Q1 16 Q

33 FRENDE ON TOP - BEST CUSTOMER SERVICE FOR THE 2ND CONSECUTIVE YEAR, BEST TRAVEL INSURANCE 6TH CONSECUTIVE YEAR

34 Summary of results for the first quarter

35 RETURN ON EQUITY AND C/I Return on equity as percentage Development in cost ratio (C/I) ,5 45,9 50,5 44,3 8, ,8 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q

36 PROFIT AND BOOK VALUE PER EQUITY CERTIFICATE Profit per equity certificate Book equity per equity certificate 2,44 49,5 50,6 1,73 45,5 47,3 47,3 0,99 1,08 1,26 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q1 16 Q2 16 Q3 16 Q4 16 Q

37 KEY DEVELOPMENTS PROFIT PERFORMANCE PRE-TAX OPERATING PROFIT NOK 432 MILL. (322) HIGHER RETURN ON EQUITY 10.6% (8.8%) LOWER COSTS LOW LOSSES NOK 355 MILL. (370) NOK 29 MILL. (26) 37

38 OUTLOOK 76% retail market portfolio means lower risk MEASURES Flat cost development Moderate losses, estimated to NOK million Solid capital base above official requirements at all times Increase in lending growth Return on equity over time of 11% Attractive dividend policy and expectation of a high direct return

39 WE ARE HERE. 39